VMBS vs. SMBS
VMBS (Vanguard Mortgage-Backed Securities ETF) and SMBS (Schwab Mortgage-Backed Securities ETF) are both Mortgage Backed Securities funds - VMBS tracks the Barclays Capital U.S. MBS Index while SMBS tracks the Bloomberg US MBS Float Adjusted Total Return Index. Both are passively managed. Over the past year, VMBS returned 6.25% vs 6.16% for SMBS. Their correlation of 0.94 suggests significant overlap in exposure. VMBS charges 0.04%/yr vs 0.03%/yr for SMBS.
Performance
VMBS vs. SMBS - Performance Comparison
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Returns By Period
The year-to-date returns for both investments are quite close, with VMBS having a 0.70% return and SMBS slightly higher at 0.72%.
VMBS
- 1D
- 0.04%
- 1M
- 0.18%
- YTD
- 0.70%
- 6M
- 1.11%
- 1Y
- 6.25%
- 3Y*
- 4.63%
- 5Y*
- 0.49%
- 10Y*
- 1.36%
SMBS
- 1D
- 0.02%
- 1M
- 0.20%
- YTD
- 0.72%
- 6M
- 1.07%
- 1Y
- 6.16%
- 3Y*
- —
- 5Y*
- —
- 10Y*
- —
VMBS vs. SMBS - Yearly Performance Comparison
| 2026 (YTD) | 2025 | 2024 | |
|---|---|---|---|
VMBS Vanguard Mortgage-Backed Securities ETF | 0.70% | 8.36% | -0.02% |
SMBS Schwab Mortgage-Backed Securities ETF | 0.72% | 8.15% | -0.07% |
Correlation
The correlation between VMBS and SMBS is 0.93, indicating a strong positive relationship between their price movements. Combining them offers limited diversification - they tend to fall together during downturns.
| Correlation | |
|---|---|
Correlation (1Y) Calculated over the trailing 1-year period | 0.93 |
Correlation (All Time) Calculated using the full available price history since Nov 20, 2024 | 0.94 |
The correlation between VMBS and SMBS has been stable across timeframes, ranging from 0.93 to 0.94 - a consistent structural relationship.
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Return for Risk
VMBS vs. SMBS — Risk / Return Rank
VMBS
SMBS
VMBS vs. SMBS - Risk-Adjusted Trends Comparison
This table presents a comparison of risk-adjusted performance metrics for Vanguard Mortgage-Backed Securities ETF (VMBS) and Schwab Mortgage-Backed Securities ETF (SMBS). Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.
| VMBS | SMBS | Difference | |
|---|---|---|---|
| Sharpe ratioReturn per unit of total volatility | -0.05 | ||
| Sortino ratioReturn per unit of downside risk | -0.05 | ||
| Omega ratioGain probability vs. loss probability | 1.26 | 1.27 | -0.01 |
| Calmar ratioReturn relative to maximum drawdown | 2.34 | 2.19 | +0.15 |
| Martin ratioReturn relative to average drawdown | 7.83 | 7.44 | +0.39 |
Data is calculated on a 1-year rolling basis and updated daily. The trend shows the change in the indicator over the past month. | |||
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Sharpe Ratios by Period
| VMBS | SMBS | Difference | |
|---|---|---|---|
Sharpe Ratio (1Y)Calculated over the trailing 1-year period | 1.45 | 1.51 | -0.05 |
Sharpe Ratio (5Y)Calculated over the trailing 5-year period | 0.07 | — | — |
Sharpe Ratio (10Y)Calculated over the trailing 10-year period | 0.25 | — | — |
Sharpe Ratio (All Time)Calculated using the full available price history | 0.46 | 1.18 | -0.72 |
Drawdowns
VMBS vs. SMBS - Drawdown Comparison
The maximum VMBS drawdown since its inception was -17.47%, which is greater than SMBS's maximum drawdown of -3.20%. Use the drawdown chart below to compare losses from any high point for VMBS and SMBS.
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Drawdown Indicators
| VMBS | SMBS | Difference | |
|---|---|---|---|
Max DrawdownLargest peak-to-trough decline | -17.47% | -3.20% | -14.27% |
Max Drawdown (1Y)Largest decline over 1 year | -2.68% | -2.83% | +0.15% |
Max Drawdown (3Y)Largest decline over 3 years | -7.65% | — | — |
Max Drawdown (5Y)Largest decline over 5 years | -17.12% | — | — |
Max Drawdown (10Y)Largest decline over 10 years | -17.47% | — | — |
Current DrawdownCurrent decline from peak | -1.29% | -1.32% | +0.03% |
Average DrawdownAverage peak-to-trough decline | -2.49% | -0.84% | -1.65% |
Ulcer IndexDepth and duration of drawdowns from previous peaks | 0.80% | 0.83% | -0.03% |
Volatility
VMBS vs. SMBS - Volatility Comparison
Vanguard Mortgage-Backed Securities ETF (VMBS) and Schwab Mortgage-Backed Securities ETF (SMBS) have volatilities of 1.61% and 1.54%, respectively, indicating that both stocks experience similar levels of price fluctuations. This suggests that the risk associated with both stocks, as measured by volatility, is nearly the same. The chart below showcases a comparison of their rolling one-month volatility.
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Volatility by Period
| VMBS | SMBS | Difference | |
|---|---|---|---|
Volatility (1M)Calculated over the trailing 1-month period | 1.61% | 1.54% | +0.07% |
Volatility (6M)Calculated over the trailing 6-month period | 3.16% | 3.03% | +0.13% |
Volatility (1Y)Calculated over the trailing 1-year period | 4.37% | 4.14% | +0.23% |
Volatility (5Y)Calculated over the trailing 5-year period, annualized | 6.77% | 4.85% | +1.92% |
Volatility (10Y)Calculated over the trailing 10-year period, annualized | 5.40% | 4.85% | +0.55% |
VMBS vs. SMBS - Expense Ratio Comparison
VMBS has a 0.04% expense ratio, which is higher than SMBS's 0.03% expense ratio. However, both funds are considered low-cost compared to the broader market, where average expense ratios usually range from 0.3% to 0.9%.
Dividends
VMBS vs. SMBS - Dividend Comparison
VMBS's dividend yield for the trailing twelve months is around 4.18%, less than SMBS's 5.17% yield.
| Position | TTM | 2025 | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
SMBS Schwab Mortgage-Backed Securities ETF | 5.17% | 4.83% | 0.50% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
VMBS Vanguard Mortgage-Backed Securities ETF | 4.18% | 4.20% | 3.94% | 3.31% | 2.35% | 1.02% | 2.01% | 2.77% | 2.72% | 2.16% | 2.10% | 2.12% |
Frequently Asked Questions
With a correlation of 0.93, VMBS and SMBS move almost identically. Holding both adds very little diversification - you're essentially doubling your position in the same market segment. Choosing one is usually more capital-efficient.
VMBS has higher volatility (1.61%) compared to SMBS (1.54%). In terms of maximum drawdown, VMBS dropped -17.47% vs SMBS's -3.20%.
On 1-year performance, VMBS leads with 6.25% vs 6.16% for SMBS. On fees, SMBS is cheaper at 0.03% per year. Their volatility is very similar. The better choice depends on whether you care most about return, fees, risk, or income.
Over the 1-year period, VMBS has performed better with a 6.25% return vs 6.16%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.
SMBS is cheaper with a 0.03% expense ratio, compared with 0.04% for VMBS.
SMBS has the higher dividend yield at 5.17%, compared with 4.18% for VMBS.
VMBS tracks Barclays Capital U.S. MBS Index, while SMBS tracks Bloomberg US MBS Float Adjusted Total Return Index. They also come from different issuers: Vanguard and Charles Schwab. Their fees differ too: 0.04% for VMBS and 0.03% for SMBS.
SMBS currently has the higher Sharpe Ratio (1.51 vs 1.45), meaning it's delivered slightly more return per unit of risk over the trailing 12 months. However, this ranking shifts over time - use the Risk/Return Score above for a more comprehensive view that combines Sharpe, Sortino, and other measures used by quantitative funds.
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